Publish date:

Stocks Head South Again

The averages end lower as investors eye some mixed earnings reports and weak economic data.
Author:

Updated from 4:06 p.m. EDT

Stocks finished lower on Tuesday, after fluctuating during the afternoon amid mixed second-quarter earnings reports and disappointing consumer confidence data on the economic front.

The

Dow Jones Industrial Average

TST Recommends

finished down 62 points at 9204.5, while the

Nasdaq

ended down 4 points at 1731.4. The

S&P 500

closed down 7.2 points at 989. The Dow moved briefly into positive territory, having been behind almost 100 points in the morning.

"We are getting little optimism from company CEOs about the second half of the year," said Peter Boockvar, a strategist at Miller Tabak. "So I think people are waiting for better economic data."

Volume was light, with about 1.35 billion shares in play on the

New York Stock Exchange

and approximately 1.6 billion shares moving on the Nasdaq late afternoon.

Treasury prices turned lower, with the yield on the 10-year note rising to 4.44%. Bonds had been higher on news of the confidence data.

The consumer confidence index dropped to 76.6 in July, its lowest level since March, from 83.5 in June, the Conference Board said. A consensus of economists had expected a reading of 85. A subindex that measures consumer expectations for the economy over the next six months fell 10 points to 86.4 in July from 96.4 in June.

"The rising level of unemployment and sentiment that a turnaround in labor market conditions is not around the corner have contributed to deflating consumers' spirits this month," said Lynn Franco, director of the Conference Board's consumer research center, in a statement. "Expectations are likely to remain weak until the job market becomes more favorable."

Only 10.5% of survey respondents said jobs were plentiful, and a third said jobs were hard to get.

Still, experts were hesitant to read too much into the consumer confidence data. "The result needs to be treated with caution, as sentiment can be ephemeral and does not always translate into behavior," said Peter Kretzmer, an economist at Banc of America Securities, in a research note.

The University of Michigan will release its consumer sentiment index on Friday. "It has showed a large rise in its preliminary assessment of current conditions for July," said Kretzmer.

Economists say the data-laden week, with indicators such as an advance reading on gross domestic product and the employment report, will be crucial in determining the direction of the U.S. economy.

In earnings news, the country's biggest phone company,

Verizon

(VZ) - Get Report

, said Tuesday that it earned $300 million, or 12 cents a share, in the second quarter, compared with a loss of $2.1 billion, or 78 cents a share, last year. Revenue rose about half a percent, year over year. The company also said it added 1.2 million net retail customers to its wireless operations in the quarter. Before several charges, Verizon earned 69 cents a share in the latest quarter, a penny better than analysts' forecasts. But the stock shed 58 cents, or 1.6%, to $35.40.

Sprint

said late Monday its second-quarter profit fell despite cost-cutting. Revenue sagged amid weaker long-distance and local calling. Following the results, UBS downgraded the stock to reduce from neutral. The company's wireless unit,

Sprint PCS Group

(PCS)

, reported a narrower loss on strong subscriber growth. Sprint shares closed down 20 cents, or 1.3%, to $15, while PCS stock ended behind 24 cents, or 3.6%, at $6.38.

Elsewhere,

DuPont

(DD) - Get Report

closed lower 42 cents, or 1%, at $43.97 after it said it earned $675 million, or 67 cents a share, in its second quarter, compared with $543 million, or 54 cents a share, last year. Excluding items the chemicals giant earned 62 cents a share in its latest quarter, about a nickel better than expectations.

Fast-food giant

McDonald's

(MCD) - Get Report

said second-quarter earnings fell from a year ago, as costs associated with scaling back its new-store ambitions offset record sales. The chain earned $470.9 million, or 37 cents a share, in its second quarter, compared with $497.6 million, or 39 cents a share, a year ago. Results were in line with expectations, however, according to Thomson First Call. Shares rose 89 cents, or 4.2%, to $22.15.

Tyco

(TYC)

swung to a profit on higher sales in the third quarter over a loss in the year-ago period. The maker of everything from beauty aids to security systems also restated $630 million in expenses going back five years. Shares fell 75 cents, or 3.8%, to $19.

European telecom-equipment maker

Alcatel

(ALA)

posted a quarterly profit from operations on stronger sales, and stood by its revenue forecast for the third quarter. The stock rose 38 cents, or 4.2%, to $9.48.

Elsewhere, chipmaker

Nvidia

(NVDA) - Get Report

reported revenue below analysts' expectations and said margins for the second quarter will fall short of analysts' estimates. Shares decreased $1.38, or 6.8%, to $19.07.

Amerada Hess

(AHC) - Get Report

said second-quarter earnings were up from year-ago levels, as gains on asset sales and better marketing and refining earnings contributed to results. The oil company had net income of $252 million, or $2.83 a share, compared with $149 million, or $1.66 a share, a year ago. The stock gained 60 cents, or 1.3%, to $47.80.

Clear Channel Communications

(CCU) - Get Report

closed 21 cents lower, or 0.5%, at $40.25 after it said earnings were up from year-ago levels, as a result of one-time gains. Net income was $251.3 million, or 41 cents a share, compared with $238 million, or 39 cents, a year ago.

R.J. Reynolds

(RJR)

said earnings fell in its second quarter, as the tobacco company lost customers to discount brands. The cigarette maker had net income of $70 million, or 83 cents a share, compared with $211 million, or $2.29 a share, a year ago. Analysts had expected the company to earn 84 cents a share. Shares ended down 91 cents, or 2.5%, at $35.54.

Shares of

Automatic Data Processing

(ADP) - Get Report

lost 91 cents, or 2.5%, to $36 after the check processor said earnings fell to $216.7 million, or 36 cents a share, in the quarter from $287.3 million, or 46 cents, a year ago. The company said it experienced weakness in its brokerage services division during the quarter.

Teva Pharmaceuticals

(TEVA) - Get Report

said its second-quarter earnings were up from year-ago levels, due to strong sales of its multiple sclerosis drug Copaxone. The generic drugmaker earned $137 million, or 49 cents a share, before onetime items, compared with $91.9 million, or 34 cents a share, last year. The stock finished up $1.07, or 2%, at $58.

E-commerce provider

Concord EFS

(CE) - Get Report

said earnings were up 36% in the second quarter. The company, which is being acquired by

First Data

(FDC) - Get Report

, had a profit of $86.1 million, or 17 cents a share, compared with $63.2 million, or 12 cents, a year ago. But shares closed down 21 cents, or 1.5%, at $13.85.

Nokia

(NOK) - Get Report

,

Texas Instruments

(TXN) - Get Report

, French-Italian firm

STMicroelectronics

(STM) - Get Report

and the U.K.'s

ARM Holdings

(ARMHY)

said they are forming an alliance to set the standards for chips used in mobile devices. Shares ended up 2 cents at $15.47.

Jones Apparel

(JNY)

fell $3.09, or 9.7%, to $28.96 after the retailer said full-year earnings would come in below its previous forecasts. The company blamed costs related to exiting two Polo Ralph Lauren product lines.

Overseas markets ended mixed, with London's FTSE 100 down 0.3% at 4137 and Germany's Xetra DAX up 0.3% at 3428. In Asia, Japan's Nikkei closed slightly lower at 9834, while Hong Kong's Hang Seng gained 0.6% to 10198. The dollar was gaining strength against the yen and euro.

On Monday, the Dow fell 18.06 points to 9266.51. The Nasdaq gained 4.64 points to 1735.34, while the S&P 500 dropped 2.16 points to 996.52.